Mumbai: Yes Bank expects fiscal slippage at 5.5% of GDP in the current fiscal year versus 5.1% budgeted, which would need additional financing of about Rs40,000 crore.
Bank says extra borrowing will not be via dated securities with funding via government’s surplus cash balance and t-bills issuance.
However, if fiscal slippage is closer to 5.8-6%, government borrowing via bonds could be around another Rs30,000 crore.
Bank says open market operations (OMO) support from RBI could be to the tune of Rs80,000 crore, likely beginning in November.
India’s benchmark 10-year bond yield likely to trade in 8-8.25% band in near term with a move towards 7.75% expected in March quarter. Reuters